THE MEDIA BUSINESS: PUBLISHING; Jitters in a 'Recession-Proof' Trade

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Since the Depression, the notion has prevailed that publishing is largely a recession-proof industry. Publishers have argued that because books are inexpensive, provide lasting pleasure and are sought by a relatively affluent clientele, their appeal persists even in hard times.

But now there is widespread concern that publishing's resilience may have been exaggerated and may today be no more than a myth.

In part, this concern reflects the striking changes in publishing over the last decade. With the spread of chains like B. Dalton and Waldenbooks, many more bookstores are now in shopping malls, where they are acutely vulnerable to the general shrinking of retail business. And the casual mall shopper is widely perceived as far less committed to book buying than is the industry's traditional public of bibliophiles. Shrinking Income

Publishers and booksellers also note that the recession comes at a time when the discretionary income of much of the middle class has shrunk. With hardcover book prices rising quickly toward the $25 mark, an alternative gift like a necktie or a bottle of liquor may look relatively cheap.

"I always thought the industry was recession proof -- until this year," said Harry Hoffman, the president of Waldenbooks. "To some extent, the industry is being hurt. Traffic is down at least 4 percent in the malls in recent months."

Leonard Riggio, the president of Barnes & Noble, which also operates the B. Dalton stores, observed: "Over all, there is no question that we can feel the fact that the economy has slowed. In the past three or four months, there has been a noticeable slowdown in traffic in the malls."

The two leading chains account for about 35 percent of all bookstore sales. A Victim of Its Own Success

Thus, in a sense, the publishing industry has become become a victim of its own success. "We've been successful in broadening our readership in recent years, but these more ephemeral book buyers are those cutting back in a recession," said Edward Morrow, the co-owner of the Northshire bookstore in Manchester Center, Vt. He added that his own store, hit by the acute recession in the Northeast, was showing "a clear tapering off" in sales in recent months.

Still, general-interest, or trade, books account for less than half the overall $14.9 billion publishing business, and other sectors like college and professional publishing have been holding up reasonably well. Bill Lofquist, a publishing analyst at the Commerce Department, said he expected industry sales to rise to $15.9 billion this year. "It's not a super year," he said, "but it's not bad."

Moreover, independent stores in some parts of the country appear to be doing well. "We are having a very good season," said Joseph E. Gable, the president of the Borders bookstore in Ann Arbor, Mich. "People around here still view books as inexpensive and rewarding presents."

Over all, the Association of American Publishers expects sales of trade books to rise this year, but only marginally when adjusted for inflation.

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Nonetheless, although books have fared better than many other retail sectors, there is great anxiety. Much of the fall in shopping mall sales has taken place in just the last few months. Moreover, the downturn comes in the midst of the Christmas season, which usually accounts for 20 to 30 percent of the annual sales of any bookstore.

Mr. Riggio of Barnes & Noble predicted that if a typical recession lasts 11 months and involves a 2 percent fall in gross national product, "this one will be longer and somewhat deeper."

As a result of the large advances now paid to many authors and the growth of publishing houses into conglomerates with high fixed costs, publishers are much more vulnerable than before to a sudden downturn. "Companies used to be lean and advances modest, but now we're bloated and expensive to run," said Jason Epstein, the editorial director of Random House.

Roger Straus, the president of Farrar, Straus & Giroux, said, "I've been told we're recession proof all my life, but the fact is that business is poor right now."

An example of the industry's difficulties can be found at Kroch's & Brentano, which operates 20 stores in the Chicago area. Half the stores are in malls. "Our mall sales have fallen off considerably in recent months -- between 5 and 10 percent," said Bill Rickman, the company's president. "The marketplace has changed and the new mall stores are more tenuous." By contrast, sales at the company's other stores have held up well.

The apparent vulnerability of publishing to a recession has led some publishers and booksellers to question the notion that publishing ever was recession proof. In an unscientific business riddled with anomalies, such ideas take hold without ever being subjected to rigorous examination.

"I've always heard that we're recession proof but never seen an economic study that proves it," said Mr. Morrow of the Northshire bookstore.

Several publishers said the proof of the industry's former ability to resist recession lay in the fact that several of today's big companies were started in the 1920's and grew through the Depression. These include Random House, founded in 1927; Simon & Schuster, founded in 1924, and Viking, founded in 1925.

But Mr. Lofquist of the Commerce Department said the Depression was, in fact, a bloodbath for many publishers. "In 1929, there were 721 publishers with sales of $182 million," he said. "But four years later, there were just 410 publishers and sales had plunged to $82 million."

And although there is a widespread belief that publishing weathered the 1981-82 recession well, figures from the Association of American Publishers show virtually no growth for trade book sales in that year, compared with an average of 13.3 percent in the years since 1982.

So perhaps, the purported resilience was always largely mythical and the current downturn may be no different from that of past recessions -- except for the fact that book sales are more thinly spread and publishing companies more leveraged, so it just might be worse.

A version of this article appears in print on December 17, 1990, on Page D00001 of the National edition with the headline: THE MEDIA BUSINESS: PUBLISHING; Jitters in a 'Recession-Proof' Trade. Order Reprints|Today's Paper|Subscribe